The problem is that the studios have sold the exclusive digital rights for most movies (which don't apply to physical DVD's) to a television channel, like HBO. The agreements last for years and, since they bring in millions of dollars, the studios aren't about to stop signing them.

So what's saving Netflix - allowing it to thrive when the technology to obliterate it already exists - is yet another attempt by Hollywood to hold onto a fading business model. Remember, this is the industry that filed lawsuits in the 1970's to prevent people from watching movies at home.